Fortune, Beard, Arnold & Arnold, LLP handles collection work for businesses and individuals around Birmingham, Columbiana and Clanton, including checks that come back unpaid. What follows is how the process actually works in Alabama, in plain terms.
If someone hands you a check and it does not clear, Alabama gives you more than one way to go after the money. There is a criminal route, run through the district attorney, and a civil route, run through the courts. They have different rules, and they have very different deadlines.
What Alabama calls a “worthless” check
A check is “worthless” when the person who wrote it passed it for something of value while intending, knowing or expecting that the bank would not honor it. That is the offense described in Ala. Code § 13A-9-13.1.
You do not have to prove what was in someone’s head. The statute treats several things as prima facie evidence of that intent:
- there was no account with the bank when the check was presented
- payment was refused for insufficient funds within 30 days of delivery, and the maker did not pay within 10 days of written notice
- the notice of dishonor came back undeliverable
Note: that 30 day window is the reason to deposit a check promptly. Leave it in a drawer for six weeks and you hand away the presumption that does most of the work for you.
The ten day notice
Before anything else moves, the person who wrote the check has to be told and given a chance to make it right.
Under Ala. Code § 13A-9-13.2, you send notice of dishonor by certified or registered mail within a reasonable time after the check is returned. The notice has to tell the drawer that they have 10 days from receiving it to pay the full amount of the check plus a service charge of no more than $30.00.
Use the statutory wording. A notice given in substantially the form the statute sets out carries immunity for giving it. A letter you write yourself does not.
The Worthless Check Unit
Most Alabama district attorneys run a Worthless Check Unit, and Jefferson County has one of the older ones, operating since 1992 under a deferred prosecution program. It costs the check holder nothing, and it is often the quickest route to payment.
What the unit will want from you:
- the original check, not a copy
- the bank’s notice showing the check was returned and why
- proof that you sent the ten day notice, and when
- identifying information for the person who wrote the check
Negotiating a worthless negotiable instrument is a Class A misdemeanor in Alabama.
Note: the unit recovers the face amount of the check and the statutory merchant service charge. It is not there to recover your lost time or your attorney fee. For those you are on the civil side. Details of Jefferson County’s Worthless Check Unit are on the district attorney’s site, and other counties run their own.
The civil side, and the deadline most people miss
This is the part worth reading twice.
Alabama has a statute written for the holder of a bad check. Under Ala. Code § 6-5-285 you have a right of action against the person who made, uttered or delivered it, and the court or jury may award compensatory damages, punitive damages, and a reasonable attorney fee.
That is the strongest civil tool available here. It is also the shortest. The action has to be commenced within one year from the date of the unlawful act.
One year. Miss it and the punitive damages and the attorney fee go with it.
Suing on the check itself is a separate and longer path. An action to enforce an ordinary unpaid check must be brought within three years after the check is dishonored, or ten years after the date on the check, whichever comes first. Ala. Code § 7-3-118(c). That route recovers the amount owed. It does not carry the punitive damages or the fee that § 6-5-285 does.
Certified checks, cashier’s checks and traveler’s checks
These are different instruments and they run on a different clock.
A “certified check” is one the bank has accepted and verified. A “cashier’s check” is drawn by the bank on itself. A “traveler’s check” is bought in a fixed amount and countersigned when it is used. In each case a bank has put its own funds behind the instrument, which is why they are treated as safer than an ordinary check.
An action to enforce one of these must be commenced within three years after demand for payment is made to the bank that accepted or issued it. Ala. Code § 7-3-118(d).
Note: the clock starts at demand, not at the date written on the instrument.
Do not take a post-dated check
Under no circumstances accept a check dated in the future.
A post-dated check is an admission on its face that the money is not there today. It muddies the question of what the drawer expected the bank to do when they handed it over, and it complicates the 30 day presumption. If someone cannot pay you today, a check dated for next month is not a solution. It is a delay with your name on it.
Where to start
If you are holding a returned check, the order of operations is usually this: deposit promptly, keep the bank’s return notice, send the statutory ten day notice by certified mail, then decide between the district attorney, a civil action, or both.
The piece worth getting advice on early is the one year window under § 6-5-285, because it closes well before most people get around to doing anything.
Collection work of this kind is part of our civil litigation focus. If you are holding a check that did not clear and are not sure which route fits, call 205.252.2222 or request a consultation.
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